The Canadian Securities Administrators announced yesterday that they have finalized changes that will transition financial reporting for investment funds to IFRS.
While reporting issuers and registrants generally were required to transition as of January 1, 2011, the transition date for investment funds was deferred in order to allow for the International Accounting Standards Board’s (IASB’s) exception from consolidation for investment companies to be in place prior to the transition. Without this exception, investment funds would have been required to consolidate investments that they controlled, resulting on potentially confusing disclosure given that their portfolios were historically shown at fair value. This issue was resolved under the IASB's Investment Entities (Amendments to IFRS 10, IFRS 12 and IAS 27) issued on October 31, 2012, which provides the required exception. According to the CSA, the definition of “investment entity” in IFRS 10 should capture, and therefore resolve the issue for, most investment funds. They do acknowledge, however, that it is possible that it may not capture all of them.
Investment funds will therefore be required to transition to IFRS for financial years beginning on or after January 1, 2014. Amendments have also been made to cover terminology differences between Canadian GAAP and IFRS and to reflect changes to financial statement presentation and will affect NI 81-106, NI 81-101, NI 81-102, NI 81-104 and the investment fund form of prospectus under Form 41-101F2.
The amendments include non-material changes made to the CSA's initial proposal published in October 2009 to reflect comments received from stakeholders. Assuming Ministerial approvals, the amendments come into force on January 1, 2014.